3.2 Evaluation during the planning stage
Evaluation at this stage is usually concerned with whether plans represent good value for money. It may be appropriate to evaluate inputs to the project, to ensure that their quality and quantities are sufficient to achieve the objectives. In large building projects, many specialist tasks are subcontracted. Specifications are developed, and potential contractors are invited to tender for work. The element of competition can lead to problems if some tenderers are over-anxious to win contracts. They may be tempted to offer very low prices or attractively fast times, making no allowance for setbacks or delays outside their control. If they fail to meet their deadlines there may be a knock-on effect, when other tasks cannot start till they finish. Those evaluating tenders need to be able to estimate the budget and timing required for a particular piece of work: the cheapest is not necessarily the best, nor the one that promises the fastest completion.
Example 6: The steel contract for the Tate Modern
The steel contract was just one of a hundred or more contracts that had to be organised. Preparing a bid might take several weeks of concentrated work for a potential contractor and a contractor might tender for many jobs and only win one. When contractors work on a number of different projects they have to schedule their own resources to fit with the needs of each project, but they also have to try to ensure an even flow of work. As one contractor said, ‘It's absolutely vital to the well-being of this company. We desperately need a job of this size in the next three months. We're bidding four at this very moment, and we have to get one of them.’
The steel contract included the purchase of the steel, fabrication of each piece prior to installation at Bankside, erecting the steel framework within the existing shell of the building and ensuring that the concrete base was strong enough to support the new structure. There were a number of elements that contractors were worried about, in particular the need to work with concrete and a wooden balustrade on a staircase.
On the day that the tender documents were due to be evaluated, the news that asbestos had been found in the building had just reached the committee. This meant that there would be a considerable delay to the project while the contamination was cleared from the site. This news may have influenced the decision.
The committee used a procedure that they had used successfully to evaluate other tenders. They opened each bid and noted the bottom-line figure on a summary sheet. The highest bid was £7,750,816 and the lowest was £5,489,840. They then looked at the cheapest to find out why it was so much lower. They discovered that the price for the steel itself was too low because they had priced a lower grade than had been specified. They had also omitted to price the wooden balustrade. When these elements had been added, the price of this bid came in line with several others. Many other adjustments were made to bids in a similar way.
A shortlist was made of contractors to interview and there was considerable concern to ensure that the contractor chosen should be able to deliver the work within the price agreed. However, price and the quality of materials were not the only considerations. The contract was eventually awarded to a contractor who had reduced the price by making a change to the schedule that promised to reduce the timescale by a quarter. This, of course, was very attractive in the light of the current delays. Unfortunately, as the work progressed, the promised saving was found not to be fully achievable.
Even when a tendering process is carried out with care, to ensure that the contract results in a partnership that will be successful for everyone, it is impossible to predict all the potential risks. Some contingency sum might be agreed, but many contracts also incorporate a process for negotiating liability for additional costs, when these arise unexpectedly.
Risk is the chance of something occurring that has an adverse effect on the project. Many risks can be foreseen and identified. For example, if the project involves development of computer-based systems, time needs to be allowed for ‘de-bugging’ once the systems are installed.
The main categories of risk can be summarised as follows.
Main categories of risk
|physical||loss of or damage to information, equipment or buildings as a result of an accident, fire or natural disasters|
|technical||systems that do not work or do not work well enough to deliver the anticipated benefits|
|labour||key people unable to contribute to the project because of, for example, illness, career change or industrial action|
|political/social||for example withdrawal of support for the project as a result of change of government, a policy change by senior management, or protests from the community, the media, patients, service users or staff|
|liability||legal action or the threat of it because some aspect of the project is considered to be illegal or because there may be compensation claims if something goes wrong|
In view of all these possibilities, the careful examination of the question below, early on in the project, can save a lot of (though not all!) problems later:
‘What could go wrong in this project?’
Having identified potential areas of difficulty you can then examine these by asking, in respect of each one:
How likely is this to happen?
How serious would it be if it did?
Having raised these questions, you can then consider what you might do either on your own or with a team. Some of the less likely possibilities and those that would really just be minor irritants may not need a lot of attention. Others could be seen as quite critical to the success of the project and you can, at an early stage, plan what to do if the worst happens.